BubbleBoy is a good person. How do I know? Only a good person would believe the government will do the right thing with direct access to a monetary printing press. I'm sure you would do the right thing but historically we never really gotten good people in government.

For more on what DavinciJ15 is talking about, check out this excellent book by Detlev Schlichter. Mr. Schlichter does a good job of debunking much of what you read in the financial press about fiat currency and an ever increasing money supply being a good thing.

BubbleBoy is a good person. How do I know? Only a good person would believe the government will do the right thing with direct access to a monetary printing press. I'm sure you would do the right thing but historically we never really gotten good people in government.

For more on what DavinciJ15 is talking about, check out the excellent book: Detlev Schlichter's book. Mr. Schlichter does a good job of debunking much of what you read in the financial press about fiat currency and an every increasing money supply being a good thing.

From that link:

Quote

Mankind has used money for more than 2,500 years. For most of history, money was a commodity of limited and practically inelastic supply.

I've been looking for a post to interject this story. It seems that man has been carrying tokens of value a little longer than that.

The chimpanzees regarded the coula nuts as a more highly-prized resource and competed for them more intensely.

In such high-competition settings, the frequency of cases in which the chimpanzees started moving on two legs increased by a factor of four. Not only was it obvious that bipedal movement allowed them to carry more of this precious resource, but also that they were actively trying to move as much as they could in one go by using everything available -- even their mouths.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.

BubbleBoy is a good person. How do I know? Only a good person would believe the government will do the right thing with direct access to a monetary printing press. I'm sure you would do the right thing but historically we never really gotten good people in government.

For more on what DavinciJ15 is talking about, check out the excellent book: Detlev Schlichter's book. Mr. Schlichter does a good job of debunking much of what you read in the financial press about fiat currency and an every increasing money supply being a good thing.

Thanks for the book. I only educated myself in this stuff in 2007 after Ron Paul said... "This monetary system is unfair it transfers wealth from the poor and the middle class to the rich." during a debate and when no one corrected him not even the TV News, my JAW DROPPED. I thought he was liar and just another scum bag politician wanting to screw us over after we voted for him, when I researched him my jaw dropped again.

At that point I realized I knew nothing about the monetary system and I started to learn. When I read that the money was created out of debt I could not believe it who would be dumb enough to allow this system to exist.

Anyhow after my Neo "I don't believe it" moment I dumped all my retirement accounts and was in 100% gold and silver and tried to solve our currency problem via software on my own, but could not come up with anything.

So when I saw Bitcoin it was exactly what I would have invented if I knew about Proof of Work.

While BTC may someday be that large it likely will be when subisidies are much lower. fees will rise but not as much as subsidies are declining.

You have no idea what fees will be, nor is there any way of knowing. It is not a moot point because bitcoin could avoid this issue entirely if it incorporated better design principles.

Fees in excess of those charged by VISA are necessary to maintain bitcoin's current security level. Of course, fees like this will kill bitcoin. Maintenance of the current security level is not attainable or desirable using the present technology.

The other option is to relax security to economize on verification costs. It is not clear how lax security can get before security problems themselves kill bitcoin.

Bitcoin's survival depends on finding a "sweet spot" where a sufficient level of security is available at txn verification costs considerably lower than VISA's. I highly doubt there is a sweet spot using the current technology.

The technology will have to be reworked to make building a secure blockchain less costly. In particular, there is absolutely no need for hardware to be purchased or electricity to be consumed in significant amounts in order to verify txns. Severe inefficiencies associated with proof-of-work would be obvious to any micro-economic theorist. I'm not claiming to be a special guy. Anyone in my discipline (excluding nutjobs such as Austrian economists), would give the same answers. The fact that we ended up with proof-of-work is due to Satoshi's failure to seek advice from experts outside of computer science and cryptography. It is purely a mistake and should be fixed.

In a Society in which there is no law, and in theory no compulsion, the only arbiter of behaviour is public opinion. But public opinion, because of the tremendous urge to conformity in gregarious animals, is less tolerant than any system of law. When human beings are governed by "thou shalt not", the individual can practise a certain amount of eccentricity: when they are supposedly governed by "love" or "reason", he is under continuous pressure to make him behave and think in exactly the same way as everyone else. - George Orwell

Fees in excess of those charged by VISA are necessary to maintain the bitcoin's current security level.

I support the idea of proof of stake but your insistence that proof of stake solves everything in every thread about every future risk of Bitcoin is .... tiring. You do a good job of driving away supporters.

Fees in excess of those charged by VISA are necessary to maintain the bitcoin's current security level.

I support the idea of proof of stake but your insistence that proof of stake solves everything in every thread about every future risk of Bitcoin is .... tiring. You do a good job of driving away supporters.

It does solve pretty much everything... It is tiring for me to listen to people fumble around with other solutions as if they were promising in any way.

In a Society in which there is no law, and in theory no compulsion, the only arbiter of behaviour is public opinion. But public opinion, because of the tremendous urge to conformity in gregarious animals, is less tolerant than any system of law. When human beings are governed by "thou shalt not", the individual can practise a certain amount of eccentricity: when they are supposedly governed by "love" or "reason", he is under continuous pressure to make him behave and think in exactly the same way as everyone else. - George Orwell

It is up to someone with programming/cryptography skills to implement my solution. I am willing to work with them to improve upon it if desired. I feel that I have done a lot just by putting answers out there for anyone to use. I cannot reasonably do any more than this.

In a Society in which there is no law, and in theory no compulsion, the only arbiter of behaviour is public opinion. But public opinion, because of the tremendous urge to conformity in gregarious animals, is less tolerant than any system of law. When human beings are governed by "thou shalt not", the individual can practise a certain amount of eccentricity: when they are supposedly governed by "love" or "reason", he is under continuous pressure to make him behave and think in exactly the same way as everyone else. - George Orwell

BubbleBoy is a good person. How do I know? Only a good person would believe the government will do the right thing with direct access to a monetary printing press. I'm sure you would do the right thing but historically we never really gotten good people in government.

For more on what DavinciJ15 is talking about, check out the excellent book: Detlev Schlichter's book. Mr. Schlichter does a good job of debunking much of what you read in the financial press about fiat currency and an every increasing money supply being a good thing.

Thanks for the book. I only educated myself in this stuff in 2007 after Ron Paul said... "This monetary system is unfair it transfers wealth from the poor and the middle class to the rich." during a debate and when no one corrected him not even the TV News, my JAW DROPPED. I thought he was liar and just another scum bag politician wanting to screw us over after we voted for him, when I researched him my jaw dropped again.

At that point I realized I knew nothing about the monetary system and I started to learn. When I read that the money was created out of debt I could not believe it who would be dumb enough to allow this system to exist.

Anyhow after my Neo "I don't believe it" moment I dumped all my retirement accounts and was in 100% gold and silver and tried to solve our currency problem via software on my own, but could not come up with anything.

So when I saw Bitcoin it was exactly what I would have invented if I knew about Proof of Work.

It is up to someone with programming/cryptography skills to implement my solution. I am willing to work with them to improve upon it if desired. I feel that I have done a lot just by putting answers out there for anyone to use. I cannot reasonably do any more than this.

LOL. You have all the solutions, but none of the skills? You know everything but can't do anything? All this about the one true solution, but there's no code? Those who can't do around here, buy. If it's such a great solution, show us the code.

It is up to someone with programming/cryptography skills to implement my solution. I am willing to work with them to improve upon it if desired. I feel that I have done a lot just by putting answers out there for anyone to use. I cannot reasonably do any more than this.

LOL. You have all the solutions, but none of the skills? You know everything but can't do anything? All this about the one true solution, but there's no code? Those who can't do around here, buy. If it's such a great solution, show us the code.

Arrogance is probably the worst enemy of security.

Ha, someone will implement my idea eventually. They will just call it their own idea when they do it. That's fine. In true Keynesian spirit, I welcome them.

I don't think this implementation will come to anything worthwhile, but there is plenty of time for new and better copycats to come on board.

In a Society in which there is no law, and in theory no compulsion, the only arbiter of behaviour is public opinion. But public opinion, because of the tremendous urge to conformity in gregarious animals, is less tolerant than any system of law. When human beings are governed by "thou shalt not", the individual can practise a certain amount of eccentricity: when they are supposedly governed by "love" or "reason", he is under continuous pressure to make him behave and think in exactly the same way as everyone else. - George Orwell

Would someone versed in scalability issues please chime in? Can Bitcoin network function at such rates - equivalent to 1.5 million transactions per block?

Hopefully only merged-mining operations will need to deal with such volumes. Client-oriented systems would be able to focus on just one blockchain (or just a few blockchains). A faster blockchain than bitcoin could take up much of the small-value transaction volume, leaving the original bitcoin blockchain for large high value transactions. Hopefully bitcoins will be worth about $40,000 or more each, and maybe not used much in day to day transactions, which would fall to one or more of the lower-value blockchains...

Proof of stake is a solution for a different problem: byzantine fault tolerance of the coin database, a.k.a double spend protection and global consistency. For this task Bitcoin uses a uniquely creative solution, called by some "Nakamoto proof of work chains"; the necessary work is funded at equilibrium (block reward=0) by the transaction fees.

What we are talking about here is initial coin disbursement, coin minting. The issue is confusing because Bitcoin cleverly employs the same proof of work for both minting and byzantine fault tolerance, thus jump starting a secure network before the transaction fee volume would otherwise enable it. While you could certainly create an e-currency based on proof of stake, the issue of initial coin distribution remains open. Without initial distribution there is no stake, thus no proof of stake.

So a resource-friendly currency would have to imagine a different way for coin distribution. Incidentally, a theoretical result know as the Sybil attack proves there is no possible method by which you could do a "fair" distribution of coins over an anonymous medium such as the internet. You must either allow some degree of centralization, or fallback to proof of work. Anything else will be subverted by automated programs and allow their authors to earn most of the minted money.

Here's how a non-POW, centralized-but-fair distribution method could go: a central authority mints all possible coins allowed by the protocol, prints them onto little pieces of paper, then pulls a "Helicopter Ben". Alternatively, a central authority has no minting powers, but can approve (or veto) a list of charitable organizations that would receive the proceeds of seigniorage; when the monetary mass is scheduled to increase, the charities get the money, in a proportion democratically chosen by the holders of currency (similar to proof of stake).

BubbleBoy is a good person. How do I know? Only a good person would believe the government will do the right thing with direct access to a monetary printing press. I'm sure you would do the right thing but historically we never really gotten good people in government.

I have more faith in democracy. I'm sure if the general public understood the problems, there would be instant political will for change. As always, the problem lays with the public, not the politicians:http://www.maniacworld.com/the-public-sucks.html

Actually, proof of stake can solve the initial distribution problem in a way, simply by initially issuing coins to the stakeholders.

Have proponents of proof of stake put up wealth, in return for which they are provided with, between them, the sum total number of coins ever to be minted. Like, say, have 210 stakeholders and issue to each of them at the start 10,000 coins.

Actually I guess they maybe don't even have to put up any wealth to get those initial coins unless there is enough competition to become an initial stakeholder that making them sacrifice some wealth to get to be one is necessary to avoid six billion people all wanting to be initial stakeholders.

Well, 210 people meeting and declaring themselves the stakeholders of the new currency is exactly what centralization means, except maybe if those 210 people will be the only users of the currency for it's entire lifetime.

The problem is this: how to create a distributed and eco-friendly currency, usable by anybody, without creating a perverse incentive for the early adopters? The system should succeed on it's technical merits alone, not by fanatical backing from a vested minority.

Proof of stake is a solution for a different problem: byzantine fault tolerance of the coin database, a.k.a double spend protection and global consistency. For this task Bitcoin uses a uniquely creative solution, called by some "Nakamoto proof of work chains"; the necessary work is funded at equilibrium (block reward=0) by the transaction fees.

What we are talking about here is initial coin disbursement, coin minting. The issue is confusing because Bitcoin cleverly employs the same proof of work for both minting and byzantine fault tolerance, thus jump starting a secure network before the transaction volume would otherwise enable it. While you could certainly create an e-currency based on proof of stake, the issue of initial coin distribution remains open. Without initial distribution there is no stake, thus no proof of stake.

The distribution problem here is extremely trivial. A currency could begin as pure proof-of-work and then progress to proof-of-stake over time.

Nevertheless, these are worthwhile points. Devising an optimal distribution process is quite complex. It requires a lot of data and modeling. Proof-of-work is almost certianly suboptimal, but it is widely accepted. It is probably more practical to just copy proof-of-work and give up on improvements in this area.

In a Society in which there is no law, and in theory no compulsion, the only arbiter of behaviour is public opinion. But public opinion, because of the tremendous urge to conformity in gregarious animals, is less tolerant than any system of law. When human beings are governed by "thou shalt not", the individual can practise a certain amount of eccentricity: when they are supposedly governed by "love" or "reason", he is under continuous pressure to make him behave and think in exactly the same way as everyone else. - George Orwell

Quite the contrary, distribution is key. Ignoring distribution, the proof-of-work chains are an elegant solution to a hard CompSci problem, and relatively efficient when funded be fees only. The required security of the network is proportional to the largest payment it can process, not total volume. The Bitcoin mining hardware existing as of today is sufficient to guard against multi-million dollar fraud. Thus a Visa sized Bitcoin network can protect multi-million dollar transactions with abysmal fees.

On the other hand, if you go for a POW distribution, you can either:- create a limited initial monetary base like in Bitcoin and expect massive deflation, perverse incentives for the early adopters, and periodic bubbles; as a person of "Keynesian spirit" which has a Krugman avatar, you should probably see the problem here- create a macroeconomically sound monetary expansion for the lifetime of the system, case in which the resources wasted for POW become a significant size of the economy, i.e a "vast resource consuming monster"

Would someone versed in scalability issues please chime in? Can Bitcoin network function at such rates - equivalent to 1.5 million transactions per block?

Yes however full nodes would require some significant hashing power. Likely transaction processing (not just block hash generation) would need to be GPU (or FGPA) accelerated. Full nodes would require significant memory to keep transaction pool fast and large arrays of fast disks. If Bitcoin ever got that large most users wouldn't run full nodes and instead connected to the network via light clients.

It is up to someone with programming/cryptography skills to implement my solution. I am willing to work with them to improve upon it if desired. I feel that I have done a lot just by putting answers out there for anyone to use. I cannot reasonably do any more than this.

Some of my favorite Krugman-isms are...

Paul Krugman: Fake Alien Invasion Would End Economic Slump

Yeah Paul good idea but a better one would be if we just selectively evacuated and blew up cities, this way we can rebuild them without all the casualties. Think about all the economic activity, people working to blow up the cities, TV shows, clean up crews and much more. Talk about economic BOOM, no pun intended.

The baby-sitting co-op that went bust teaches us something that could save the world.

The title shows us why your plan will not work yet you still persist Paul, I'm impressed. Why? I don't know anyone who can write down a solution that ends in disaster and call a plan to save the world. You are one of a kind Paul Krugman you deserve that fake Nobel prize.

I wonder if people would be dumb enough to believe in a Nobel prize in pooping if a banker created it, called it Nobel then paid the official committee to give it out along side of rest of the Nobel prizes. I mean it worked for economics so why not Nobel poop? The winner would the guy who is full of shit, just like the economic prize winner.